Correct. However, spending $10-$20 on it a few times a year seems like as harmless and cheap a form of entertainment as anything else. The money spent on the lottery is as irretrievably gone as any other dollars spent on an experience. But in this case, you just might win a life-changing amount of money. Can't get that from a King Crimson concert. And if you did, Robert Fripp would lock the doors of the venue and steal it from you, anyway.
Not correct. You either are assuming that the lottery has zero operating costs, or don't understand the concept of profit.
Second, you have the facts wrong. Depending on the game, as much as 75% of the take goes to winners. In the case of Powerball, which is the game currently being discussed, 60% is paid out to prize winners.
Depending on the game, 10-20% is sent back to the states in the form of tax revenue, which is typically spent on education.
Is this an inefficient way of raising tax revenue? Yes.
Is this a regressive tax (the least equitable form of taxation)? Yes.
Nevertheless, has the lottery provided states with billions of dollars of revenue which, but for the lottery, would have to be raised in another manner? Yes.
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